Package Store Updates

Governor Signs Bill Regarding Shipping by Package Stores

On May 25, 2007, Governor Rick Perry signed into law Senate Bill 1229 revising the Alcoholic Beverage Code with regard to the sale and delivery of alcoholic beverages by Texas package stores and wine only package stores. You may review a copy of the law here.

SB1229 applies only to holders of package store or wine only package store permits in Texas and has no effect on wineries inside or outside of Texas.

This bill does three things:

It expands the local delivery area of package stores and wine only package stores. SB1229 says that the holder of a package store permit or wine only package store permit issued for a location within a city or town, or within two miles of the corporate limits of a city or town, who also holds a local cartage permit, can make deliveries of alcoholic beverages to customers within the city or county where the store is located, and within two miles of the corporate limits of the city. Previously, the law only allowed deliveries within the city or two miles of the city limits.

It prohibits package stores and wine only package stores in Texas from shipping alcoholic beverages through the holder of a carrier's permit to customers outside of their local delivery area. Previously, the law allowed them to make shipments to customers anywhere in Texas where the sale of the alcoholic beverage was legal.

It allows the holder of a package store permit or wine only package store permit to deliver alcoholic beverages to the holder of a carrier 's permit for transportation outside of this state in response to bona fide orders placed by persons authorized to purchase the beverages.

This law went into effect on September 1, 2007.

Out-of-State RetailersUpdated August 10, 2010

Siesta Village / Wine Country Gift Baskets Ruling

Background

A lawsuit was filed in U.S. District Court on April 3, 2006, challenging the constitutionality of certain provisions of the Alcoholic Beverage Code and seeking an injunction barring their enforcement. The lawsuit claimed that sections of the Code discriminate against interstate commerce, and violate the Interstate Commerce Clause, by authorizing in-state wine retailers to ship wine directly to Texas consumers while denying out-of-state wine retailers the same right.

District Court Ruling in January 2008 (Later Reversed on Appeal)

On January 14, 2008, a final order was issued in the twin cases of Siesta Village v. Steen and Wine Country Gift Baskets v. Steen. The judge declared certain aspects of the Alcoholic Beverage Code unconstitutional, enjoining the enforcement of those laws. Among other things, the judge ruled that out-of-state retailers are eligible to apply for, and receive, a Texas retailer permit authorizing them to sell and ship wine directly to Texas consumers.

The judge ruled that once receiving the permit, out-of-state retailers must also abide by relevant Texas laws, such as the one that mandates that all retailers purchase their product from a Texas wholesaler or Texas winery. In turn, they are then able to do whatever the law allows Texas retailers to do, such as shipping wine directly to consumers in Texas.

Following the district court ruling, TABC made an Out of State Wine Only Package Store Permit available to out of state retailers. However, no permits were ever issued.

Reversed on Appeal in January 2010 (But Mandate not Issued)

On January 26, 2010, a three member panel of the 5th Circuit Court of Appeals reversed the district court's ruling that invalidated state provisions that only retailers with a physical presence in Texas could deliver to consumers in Texas. In other words, the appeals court ruled that the Texas laws that allow in-state retailers to deliver, but NOT out-of-state retailers, is not a violation of the Interstate Commerce Clause of the US Constitution. The State of Texas CAN prohibit out-of-state retailers from shipping wine to Texas consumers. TABC is not required to offer a permit to out-of-state retailers.

The appeals court said that the Interstate Commerce Clause and the Granholm decision intend to prevent discrimination against out of state producers and products, which means states can't discriminate against out-of-state wineries. However, this does not protect out-of-state retailers.

As a result of the appellate court's ruling, Texas laws prohibiting out-of-state wine retailers from shipping wine directly to Texas consumers violate neither the Commerce Clause of the U.S. Constitution nor the Supreme Court's decision in Granholm.

Request Filed for "En Banc" Review in February 2010

On February 9, 2010, the plaintiff / appellant filed a petition for "en banc" review (meaning the entire appellate court) for reconsideration of the appellate court's decision. As a result, the appellate court's mandate was not issued pending a decision on the petition for an en banc review. Pending that decision, the TABC continued to follow the district court's decision, which required TABC to offer a permit to out-of-state retailers.

Request for "En Banc" Review Denied in July 2010

On July 22, 2010, the appeals court denied the request for an "en banc" review, and the decision by the appeals court became final. (The appeals court ruled in January 2010 that the Texas laws that allow in-state retailers to deliver, but NOT out-of-state retailers, is not a violation of the Interstate Commerce Clause of the US Constitution.)

The State of Texas CAN prohibit out-of-state retailers from shipping wine to Texas consumers. TABC is not required to offer a permit to out-of-state retailers.